What is Zomato-Paytm ₹2048 crore deal?

India’s largest online food delivery company, Zomato, has finalized a deal with another well-known Indian company, Paytm, valued at approximately ₹2,048 crores. Zomato Private Limited, a non-governmental organization established in 2008, has acquired Paytm’s movie ticketing business, a move that has been officially confirmed by Paytm.

Zomato has achieved remarkable growth in a short time, a feat that is challenging for new companies to replicate. Meanwhile, Paytm has been experiencing significant financial losses. To help mitigate these losses, the company has transferred a substantial portion of its business to Zomato. This major deal raises questions about how Zomato will further develop and manage Paytm’s ticketing business moving forward. Let’s explore the details of the Zomato-Paytm deal.

Zomato

Zomato is an online restaurant discovery and meal delivery company founded in 2008 by Deepinder Goyal and Pankaj Chaddha. The idea for Zomato came to Deepinder while he was waiting for his order in the office canteen. He realized that the traditional menu model was outdated and needed to be upgraded for the digital era. Initially launched as Foodiebay, the company rebranded to Zomato in 2010, a name that is now widely recognized.

Under the leadership of CEO and co-founder Deepinder Goyal, Zomato has seen significant growth. In July 2024, the company’s shares rose over 300% from the previous year, resulting in a market valuation of ₹1.8 lakh crore. As a result, Goyal became a billionaire, with a net worth exceeding ₹8,300 crore, making him the wealthiest professional manager in India.

In its early years, Zomato focused on major metropolitan areas such as Delhi NCR, Mumbai, Bangalore, Chennai, Pune, and Kolkata. Due to the positive response, the company expanded its services and now operates in over 400 cities across India. As of 2024, Zomato’s total assets have reached a value of ₹23,356 crore.

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Is ticket booking available on Zomato?

After the deal between Zomato and Paytm, one question on everyone’s mind is when we will see the Movies & Entertainment feature on the Zomato app. The straightforward answer is that this feature will not be available on the Zomato app for the next 12 months; instead, it will be found on a new app operated by Zomato. For now, you can only access this feature through Paytm for the next year. Zomato has not yet officially released much information regarding the new app, so details are still unclear at this time.

Is Zomato buying Paytm?

Recently, Paytm’s movie and event ticketing business will be acquired by Zomato pvt ltd for ₹2,048.4 crore. One 97 Communications Limited (OCL), the company that controls the whole Paytm app feature, has finalized negotiations to sell Zomato its entertainment ticketing division sector, which includes movie, sports, and event (live performance) tickets, etc.

Zomato pvt ltd shares rise 2% on the ticketing company purchase, while Paytm’s share price soars over 5%. The transaction is for a cash consideration of Rs 2,048 crore. The shares of Paytm and Zomato are both listed. Paytm decided to divest its entertainment tickets business to concentrate more on its core payment facilities and financial services distribution businesses.

Zomato & Paytm share prices

After trading hours on 21 August 2024, Paytm’s share price was Rs 573.10, with a market capitalization of Rs 36,471.19 crore. At the same time, Zomato’s market value on BSE was Rs 2,29,548.91 crore and its shares were trading at Rs 259.95 per share. Zomato fell by 1.2% during the day, while Paytm shares rose by about 1%.

If we look at the performance of both companies in the last 1 year, Zomato has given profits to investors between 165%-170% and the company earned a revenue of Rs 12,961 crore in the year 2024, while Paytm (One97 Communications Ltd) shares remained in loss with -15% in the last one year, which is now performing well. The company earned a revenue of around Rs 10,525 crore in the last year.

Paytm

Paytm, which was started in August 2010 by Vijay Shekhar Sharma whose parent company is One97 Communications, has rapidly grown in India to become India’s leading name in the field of digital payments and financial services. Headquartered in Noida, Uttar Pradesh, Paytm has transformed the way transactions are done in India and brought about a revolution in digital payments.

Paytm’s competitors were brands like Google Pay and PhonePe which were left far behind by Paytm. Paytm has made payments easy, secure and technologically advanced and has become the first choice of people due to better cashback discounts. The company has promoted financial inclusion by making digital payments accessible to everyone, from small merchants to large businesses. With services like mobile payments, banking, insurance and wealth management, Paytm has become a comprehensive financial ecosystem.

However, after RBI’s tough stance on Paytm Banks, Paytm’s shares saw a decline due to which the company’s shares went into a huge loss and people started losing faith in Paytm. Under the Zomato-Paytm alliance, people’s faith in Paytm, the master of digital transactions, has been revived and the shares have again started showing positive signs. With earnings of ₹9,978 crore in FY 2024, Paytm has once again proved its ability in the field of online transactions.

What is the market position of Zomato?

Zomato has been the centre of attention on Dalal Street for a while now because of the meal delivery service’s multi-bagger returns. Numerous brokerages are still bullish about the stock and believe it has more upside. However, One 97 Communications Ltd is still having trouble after the RBI’s regulatory investigation conducted earlier this year. Zomato stock has made investors rich in just one year, in which the stock has given excellent returns.

Zomato is among the profit-gaining companies this year, which earned a revenue of 12,961 crores in the last financial year, in which the net profit was 351 crores. If we look at the shareholding pattern of the company, FII has invested 54.11% in it, while 30.10% has been invested by retail investors and 12.52% by mutual funds. Motilal Oswal ELSS Tax Saver Fund Direct-Growth is at the top among the top mutual fund investors, which has an investment of 7.89% in the total mutual fund investment.

What type of company is Zomato?

On August 21, the two cutting-edge tech businesses, Zomato and Paytm, notified the exchanges that their boards had approved the cash transaction. Zomato now offers a wider range of lifestyle activities on a single platform, including shopping, staycations, live events, movies, dining out, and sports ticketing. Although many competitors keep coming and going in the market of Zomato, the main competitor is Swiggy which has been working in the market along with Zomato for many years.

Zomato has been the first choice of customers due to its attractive cashback, discounts, customer support, better service and many other factors, due to which today the first name that comes to our mind as soon as we think of online food delivery is Zomato and from this, we can guess to what extent Zomato has made its mark in the Indian market.

Conclusion

In conclusion, Zomato Private Limited, a leading Indian multinational company in restaurant aggregation and food delivery, continues to expand its business through strategic acquisitions. The recent purchase of Paytm’s movie and event ticketing division for ₹2,048.4 crores demonstrates Zomato’s ambition to diversify its services and enter new market segments. This acquisition enhances Zomato’s platform by adding entertainment ticketing services and aligns with Paytm’s strategy to focus on its core payments and financial services.

Recently, the Reserve Bank of India (RBI) issued a notice against Paytm, which hurt the company’s stock, leading to a decline in its shares. However, the partnership between Zomato and Paytm has resulted in a positive response for Paytm’s shares. It is anticipated that this merger will be beneficial for investors. Please share your thoughts in the comments on how you liked this post.

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